Power Play

HARD LINE: Western oil companies face new challenges as Putin reasserts his control over Russia's energy business

On the last wednesday of September, Russia's second largest oil company, Lukoil, hoisted the Stars and Stripes up a flagpole outside its Moscow headquarters to celebrate a landmark deal: with a $2 billion bid, the U.S. firm ConocoPhillips had just won an auction for the Russian government's 7.6% stake in the firm. The two companies promptly announced a strategic alliance to develop oil reserves in the Russian Arctic and potentially work together in Iraq. For Jim Mulva, Conoco's president and chief executive, the deal amounted to a coup, giving Conoco access to 8 billion bbl. of proven oil reserves at a...